News Release
Jan. 18, 2001


MORRO BAY, Calif. (Jan. 18, 2001) -- After seven months of effort, Duke Energy continues to work with California’s governor, legislative leadership and other stakeholders to provide solutions to help relieve California’s energy crisis.

"The tireless hours of work with the various stakeholders involved in this crisis have been productive, including our discussion with the governor and legislative leadership last night," said Harvey Padewer, Group President Energy Services. "Our desire is to continue to provide solutions and be involved in productive discussions to help solve this crisis for both the short and long term.

"Duke Energy currently manages approximately five percent of California’s generation," said Padewer. "It is obvious that with such a small percentage of the market, we cannot control the current crisis or the flow of power in the state. In fact, for all of 2001, 90 percent of our generation has already been sold to other suppliers with California delivery points. All of our available generation is running flat out to meet these obligations and to supply the state’s power grid during this crisis. There are many players in the California energy market and all, not just a few, must be involved in providing solutions, including other suppliers in the region."

In 2000, Duke Energy’s California power plants generated 70 percent more electricity than they did in 1999. During the year, the plants provided 17 million megawatt hours of electricity to the state’s power grid versus 9.5 million the previous year.

As the state began to clearly see the magnitude of the energy crisis, Duke Energy offered specific solutions to address the state's electricity supply shortage. To address the concern associated with the high energy prices, in July Duke Energy offered to provide up to 2,000 megawatts of electricity to the incumbent utilities at $50 per megawatt-hour for a five-year period beginning Sept. 1, 2000.

Additionally, in July, Duke Energy asked the governor to use his existing authority to allow California utilities to enter into bilateral contracts with energy providers, so they could better manage their exposure to high energy prices. Such agreements were not permitted under California rules, which was a significant contributor to the problems PG&E and Edison are currently facing. This proposal was not taken advantage of and the price is now much higher due to the dramatic increase in gas prices.

Also in July, Duke Energy proposed to deliver 2,000 megawatts of new supply through the construction of generation facilities. The company encouraged Governor Davis to use his authority under the California Emergency Services Act to streamline the permitting process to facilitate the rapid construction of environmentally friendly generation by 2001. With an expedited permitting process, Duke Energy offered to deploy its available resources to construct 500 megawatts for commercial operation in 2001 and 1,500 megawatts for 2002.

"Since arriving in California in 1998, Duke Energy has embraced the state as one of its domestic centers of operation," said Padewer. "We located our western regional headquarters in California and we invested over $600 million and have over 200 employees in the state. Additionally we have had plans to reinvest more than $1.5 billion of our earnings in California. Duke Energy prides itself on being part of the communities and regions it serves and its investments clearly demonstrate that Duke Energy has been committed to California."

Duke Energy, a diversified multinational energy company, creates value for customers and shareholders through an integrated network of energy assets and expertise. Duke Energy manages a dynamic portfolio of natural gas and electric supply, delivery and trading businesses -- generating revenues of nearly $22 billion in 1999. Duke Energy, headquartered in Charlotte, N.C., is a Fortune 100 company traded on the New York Stock Exchange under the symbol DUK. More information about the company is available on the Internet at:



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